08/29/2012 04:16 pm ET Updated Oct 29, 2012

Pandora Q2 2012: Streaming Music Company Beats Expectations

(Reuters) - Pandora Media Inc reported better-than expected results and raised its outlook on strong quarterly advertising sales.

Shares of the online streaming music service rose 8 percent in after-hours trading. They closed at $10.08 on Wednesday.

Pandora said second-quarter revenue jumped 51 percent to $101.3 million, beating analysts' expectations of $100.94 million, according to Thomson Reuters I/B/E/S.

On a Non-GAAP basis, the company broke even, besting analysts' expectations of a loss of 3 cents per share.

The Oakland, California company, which is more than 10 years old, is being carefully watched as a new model for radio listening as more people use the Internet to stream music to their cars, home stereos and mobile devices.

Pandora is dipping into its coffers to aggressively build out a local sales force since it largely depends on advertising revenue.

Advertising revenue rose 53 percent.

The company must pay for the rights to play songs, and as more people listen, the more expensive it becomes.

Pandora's market share of people listening to U.S. radio is at 6 percent and growing -- in a crowded field that includes Clear Channel, Sirius XM Radio and Spotify.

The company raised its full-year revenue forecast to a range of $425 million to $432 million from $420 million to $427 million.

(Reporting by Jennifer Saba; Editing by Gary Hill, Bernard Orr)